Update : Government looks to split GAIL
In order to meet its disinvestment targets, the Union Government is attempting to split one of India’s largest PSU, the Gas Authority of India Limited (GAIL).
- GAIL is India’s largest gas company. It has enormous stakes in piping, distribution, and transport of gas all around the company. Apart from its core business of gas, GAIL also has other interests.
- GAIL owns and operates over 11,500-km of natural gas pipelines in the country and sells around 60% of natural gas in the country.
- The government has a 54.89% stake in GAIL India. Its current market cap is Rs 65,600 crore.
- It owns a petrochemical plant at Pata in Uttar Pradesh.
Why GAIL is being downsized?
- The Union Government plans to downsize GAIL and split its core businesses.
- The oil ministry is not happy with GAIL’s performance in building India’s pipeline network.
- It did not start executing the Rs 12,940 crore Jagdishpur-Haldia and Bokaro-Dhamra pipeline until the government agreed to share 40% of the project cost as a grant from the budget.
- There is also a possible conflict of interest in its role as an infrastructure provider and carrier of Natural gas.
- Since GAIL keeps separate accounts for its gas pipeline and marketing businesses, it is far easier to split them into two entities.
The sale of a stake in the pipeline business of GAIL can help the government meet part of its Rs 1,05,000 crore target for raising revenue from disinvestment in the year to March 31, 2020.
|View All E-Books: Recent Release|